If Risky Inc.has an outstanding bond with an annual coupon payment of $120 and is currently priced at $842,what is this bond's current yield?

A) 14.25%
B) 12%
C) 7.125%
D) 18.50%

Annual Coupon Payment

The yearly amount paid to a bondholder, usually based on the bond's face value and its stated interest rate.

Current Yield

The annual income (interest or dividends) divided by the current price of the security, typically used in reference to bonds.

Coupon Payment

A periodic interest payment to bondholders, typically paid semi-annually.